Michigan Governor Signs Small Business Health Care
Bill

July 30, 2003 (PLANSPONSOR.com) - Michigan Governor
Jennifer Granholm has inked the last of five bills intended
to reform the small business health insurance market through
stabilizing costs and prohibiting insurance companies from
"cherry picking" only the healthiest small business workers
to insure.

>The five bills – SB 234, SB 238, SB 460, HB 4280, HB
4281 – apply to companies with fewer than 50 employees and
seek to offer more flexibility to these firms through rate
bans, regulated rates and ceilings on premiums.
“By making health care coverage costs easier to
predict and giving small businesses more flexibility to
shop around for the best coverage and premiums, we are
helping to ensure that small business will continue to
flourish in Michigan,” said Granholm, according to
Washington-based legal publisher BNA.

Paramount among these reforms are limits on how high
insurers can raise premiums when employees at their covered
companies become sick and the elimination of “cherry
picking” only healthy participants.
Previously,
Blue Cross Blue Shield of Michigan (BCBSM) would be
required to cover workers regardless of age or health
status, creating a glut for BCBSM when other insurers began
dumping high-risk workers onto its rolls to reduce their
own risk.
This put the nonprofit BCBSM, which already insures
nearly half the state’s population, under a greater
financial burden.

Yet under the new laws,
a certain percentage of a group’s members must enroll to
create a pool of healthy and sick individuals to spread the
risk and reduce “cherry picking.”

>Additionally, the quintet of health-care bills
includes reforms such as:

permitting insurance carriers in the small
business market to create 10 geographic areas for rate
adjustment

requiring BCBSM to cover sole proprietors and
allow other carriers to cover sole proprietors if they
wish (new rules will cover the sole proprietor
category)

requiring carriers to cover any purchaser with
renewable insurance, unless the carrier leaves the
area

requiring the state insurance commissioner to
determine whether reasonable competition exists in the
small group market.

However, opponents of the bill – albeit few in
number – argued that the legislation would simply provide
Blue Cross with an unneeded advantage in the marketplace,
on top of its tax-exempt status as a nonprofit
corporation.